How a Red Pen can Be Bloody Mess for an Annuity IMO


The pen is mightier than the sword. You heard that one, right? As such, a pen can slice off a goodly amount of your assets and puncture your reputation.

Does that pen scribble lies or defame another? No. It merely draws a red circle, this one around a number – 12.2% perhaps.

That was a bit of wisdom passed on by David Rauch, general counsel for the Annexus Group, during the National Association for Fixed Annuities annual meeting last week in Phoenix. He was amazed by how often sales people mark up marketing material to emphasize points. In his example, Rauch had a fictional Johnny Hotshot circle the most optimistic percentage return on an indexed annuity.

That came back to bite ABC IMO, his make-believe marketing organization. In a mock case, Rauch illustrated just how uncomfortable an IMO principal can become in a situation like that. Rauch described the sophisticated software that can slurp up years of an organization’s email and spit back the most damning messages. You could almost see lawyers rubbing their hands together as they await the wheels to pop up three 7s. Then he showed the sickening impact the email would make during the court proceeding.

Rauch played this to great effect, and engaged in a little funny plaintiff-lawyer prodding. But the serious point is if marketers and salespeople misdirect older clients, they are duly exposed to lawsuits and sanctions. Not only do they harm those clients, but they bring discredit to the rest of the industry.

This is a time when Americans should be seriously considering annuities to protect their income. Instead, they wade through countless warnings about how complicated annuities wielded by sleazy salespeople will separate innocent senior citizens from their last dime.

So, salesfolks should not be marking up marketing material they leave behind. Usually that stuff is so full of disclosures and indistinct language that a reader would be looking for the kind of clarity that a red circle around a pleasant number would lend.

That’s one point. The other that the industry can take away from these kinds of cases is how good can the marketing material be if a salesperson has to mark it up to bring home some memorable positive points?

It’s worth reviewing the brochures and sales sheets to see if they reflect the true value of the product. It is not just a good rate. That’s a commodity – and it will lose to the next product offering a quarter point higher.

What is the unique selling proposition? Studies can identify consumer trends and demands. But, really, how about the agents and advisors who meet the people day in and day out? Wouldn’t they know what clients fear and what they need? Then that can be translated into the clearest message allowable by law. That will take a little bravery though.

Everybody wins in that case.


Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers, magazines and insurance periodicals. Connect with Steve →

Ad will close in 15 seconds or Skip this ad